(Bloomberg) -- Masimo Corp. has responded to a lawsuit by an activist investor in a fight over board seats by asking a judge to validate the disclosure requirements it has imposed on anyone nominating directors.

The medical device company is being sued by Politan Capital Management over what the activist investor has called “draconian” amendments to its bylaws. Masimo filed a counterclaim Monday asking a Delaware Chancery Court judge to uphold the measures, saying they’re needed to ensure its shareholders are fully informed when they vote for directors.

“Politan is refusing to provide information about its significant financial backers and ‘sidecar vehicles’ created for the purpose of launching a campaign against Masimo,” the company said in an emailed statement. “Masimo believes stockholders have a right to know. The bylaw amendments are designed to ensure that voters are properly informed if a nominating stockholder (or its backers) has incentives that are misaligned with Masimo’s other stockholders.”

Politan, which owns an 8.9% stake in Masimo, filed a complaint in the Delaware court Friday, arguing the measures are a deterrent to nominating directors at Masimo and could more broadly chill shareholder activism if others follow suit. The New York-based firm is asking a judge to throw out the amendments to Masimo’s bylaws, along with some change-of-control provisions.

A representative for Politan declined to comment on Masimo’s counterclaim.

Nomination Requirements

The measures would require Politan -- or any shareholder seeking to nominate directors at Masimo -- to disclose some of its investors and what other companies those investors or their family members own shares in. They also call for dissident shareholders to reveal other Masimo investors they have spoken to and who support them. An activist would also have to disclose which other companies it has nominated directors at over the past 36 months and those for which it plans to do so in the next year.

Masimo said in its court filing that the measures were implemented in response to regulatory changes that will see boardroom battles, like the one shaping up at Masimo, use a so-called universal proxy card, which allows stockholders to pick and choose from the directors nominated by management or an activist, rather than vote for one entire slate or the other. Masimo argues they were also adopted in a response to a pattern of “troubling and dishonest behavior” by Politan and its founder, Quentin Koffey, in discussions with the company.

‘Detriment’ of Targets

“Politan and Koffey pursue these activist strategies under the guise of maximizing value to stockholders,” the company said in its filing. “In reality, their aim is to benefit Politan, Koffey, and Politan’s investors—including the perceived reputational benefits Politan and Koffey receive by causing dramatic corporate shake-ups to the detriment of their targets’ long-term stockholders.”

Masimo also is asking the judge to award it legal expenses and other damages related to the suit.

The case is Politan Capital Management LP v. Kiani, 2022-0948-NAC, Delaware Chancery Court.

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